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The American Prospect - articles by authorenDon't Dismantle Government—Fix Ithttp://prospect.org/article/dont-dismantle-government%E2%80%94fix-it
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<p>Members of the media gather for a news conference at the Capitol Building in Washington, DC, on November 18, 2014, announcing the start of repairs in the Capitol Dome Restoration Project.</p>
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<p><em>Below is an excerpt from</em> <a href="http://books.simonandschuster.com/American-Amnesia/Jacob-S-Hacker/9781451667820">American Amnesia: How the War on Government Led Us to Forget What Made America Prosper</a><em>, by Jacob S. Hacker and Paul Pierson, published by Simon &amp; Schuster on March 29. </em></p>
<p><span class="dropcap">A</span>t the beginning of <em>The Book of Laughter and Forgetting</em>, Milan Kundera’s narrator describes a snowy 1948 scene in Prague, with leading communists addressing a crowd. One, Vladimir Clementis, places his fur hat on the head of his bald companion, Klement Gottwald. When Clementis is later purged and executed, the Party’s propagandists erase him from the photograph. All that is left is his fur hat.</p>
<p>The enabling role of government is like that fur hat. Today, we see only tiny reminders of a much bigger reality. We know government built a road or a school but too often fail to recognize the many ways in which it built prosperity. More than simply discounting government, an increasingly vocal movement argues that it is “big government,” not private market failures or weak public policies, that stands between us and a better future. Yet in the United States as elsewhere, building prosperity has always required a constructive, if sometimes contentious, partnership between markets’ deft fingers and government’s strong thumbs. Markets bring extraordinary dynamism. But it is a dynamism that must be constrained and supplemented through public authority. On their own, markets will not ensure clean air or water. They will not invest adequately in education or research and development. They will not provide high-quality infrastructure, or health care that’s affordable and accessible, or sufficient preparedness for retirement. They will not deliver a relatively stable macroeconomy—or a livable planet.</p>
<p>In many specific areas, Americans still believe that the public sector has a vital role. They support government regulation of the environment and government funding of education. They strongly endorse Social Security, Medicare, and most other social programs. They believe political leaders have a responsibility to manage the economy. What has changed is that voters have become skeptical that government has the capacity or inclination to foster broad prosperity, especially when doing so requires it to take on new or newly intensified challenges. To build a mixed economy for the twenty-first century, a critical mass of citizens—and their leaders—have to believe once again that government can address their most pressing concerns.</p>
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<p><strong>Distrust in public institutions is a broad cultural trend.</strong> It is whipped up in popular entertainment and reinforced by a news media that sometimes seems to relish treating every person and organization as equally venal. Distrust in government, we have seen, is also, however, spread systematically, deliberately, and relentlessly—by GOP leaders who gain politically by “destroying the village to save it” and by powerful interests that have profited from the confusion and disaffection that widespread distrust feeds.</p>
<p>Consider the biggest threat facing our planet: global warming. Sowing doubt about climate change has proved a huge and hugely successful enterprise. Indeed, the fossil fuel industry deserves some special prize for chutzpah: In its propaganda, the bad guys aren’t carbon-emitting corporations trying to preserve trillions in dirty assets but instead <em>climate scientists</em> supposedly ginning up a false crisis to get research grants. The modern GOP has joined the industry in its endorsement of whatever egregious defense seems most effective at the moment. Although the first lines of resistance (“global warming isn’t happening”; “it is, but for natural reasons”) have more or less crumbled, and “I’m not a scientist” doesn’t seem likely to work for long, either, there are plenty of additional trenches to retreat to: “Reform won’t work.” “It will be too expensive.” “It is pointless absent efforts by other countries.” “We want reform, just not this one —or the next one.” In the meantime, the fossil fuel industry continues to book huge profits and atmospheric carbon dioxide levels continue to rise.</p>
<p>The marketplace of ideas is of great value. But just as in the actual marketplace, we all need help deciding which products are reliable and which are not. <em>Consumer Reports </em>is available for car buyers—whose decisions are a lot simpler than the typical policy choice. Yet, in our hyperpolarized political world, institutions recognized as credible sources of independent knowledge continue to lose ground.</p>
<p>Take the news media. As much as the decline of broadcast and print news has hurt independent journalism, the media remains the main mechanism through which people learn about the broader world. Too often, however, reporters structure stories to create controversy or convey catastrophe. Indeed, one basic PR problem of the mixed economy is that it has all the narrative elements that make most journalists recoil. <span class="pullquote-right">Picture this headline: “Things are Getting Better, Slowly, Because of Government Policy.” Your eyelids are probably drooping.</span> Journalists are attracted to controversy, not cooperation; decline, not improvement; and people, not policy. The basic story of this book—that governments and markets, working in tandem, have steadily increased human welfare (if, of late, far too gradually)—offers no hook that will excite reporters.</p>
<p>What’s more, even when journalists cover important policy debates, they tend to fall into the trap of “he said, she said” reporting on political conflict. Simply recounting the claims of both “sides” in a debate—each debate having exactly two—imparts a potentially misleading message of unresolved controversy and false equivalence. When the weight of the evidence is in fact on one side, the “he said, she said” approach provides journalists with a safe posture of neutrality that, in practice, advances particular agendas and makes it harder for readers to understand events. We have enormous respect for journalists, and could not have written this book without the work of many excellent reporters who combine deep knowledge of American politics with a strong commitment to informing their audience. But we also find that reporters too often lack the expertise or willingness to assess competing claims or to aid readers in making reasonable judgments. We would be the last to question the contributions of dissenters from conventional wisdom. But the collective assessments of leading knowledge institutions are not just one side in a controversy. When rent-seekers and credentialed experts disagree, it is the experts whose views should be granted the greater legitimacy.</p>
<p>And here we have some more hopeful news. Internet journalism, while producing a lot of junk, has also provided an important check on self-interested claims, fact-challenged arguments, and sloppy reporting. The internet’s rise has encouraged the development of deep and data-driven journalism, both through new web-based platforms such as Vox and 538.com and through efforts attached to conventional news outlets (<em>Wonkblog</em> at the <em>Washington Post</em>, <em>The Upshot</em> at the<em> New York Times</em>). Evidence-based analysis can now go toe-to-toe with soft punditry, as when Nate Silver’s online election analysis revealed serious limitations in traditional coverage of election campaigns. Nonprofit foundations have also played a role, intervening to finance time-intensive reporting on important issues. Readers have new opportunities to learn credible interpretations of public issues and to distinguish such interpretations from hyperbolic postures.</p>
<p>Now the stakes need to be raised. Too often, public figures and anointed experts pay no reputational price when they shill for private interests or state things that are patently untrue. Regurgitating industry talking points or echoing political hacks is simply considered “part of the game.” But enhancing our prosperity is not a game, and access to public platforms designed to inform citizens is not a right. Journalists and other thought leaders in the nonprofit and business worlds need to restore basic norms of naming and shaming. They need to be more assertive in identifying and shunning so-called experts who are repeatedly and demonstrably wrong or whose association with vested interests raises questions of ethics and credibility. Reforms that redistribute power can help, by increasing the pressure on media to resist “he said, she said” reporting that protects vested interests. But journalists and the institutions that train, support, and guide them need to do more to support the basic ideal of evidence-based policymaking that the current media environment does too little to encourage.</p>
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<p><strong>The framing of “government vs. the market”</strong> has become so ubiquitous in our culture that most of us simply take it for granted. In discussing this book with different audiences, we have been struck repeatedly by how often thoughtful and informed people slip into describing government as if it were a vehicle for redistribution. Some favor that redistribution; others oppose it. But what is missing is an understanding that most of what government does is not about redistribution at all; it is about addressing a wide range of problems that markets alone are ill-equipped to tackle.</p>
<p>Our discourse about government has become dangerously lopsided. The hostility of the right is unceasing and mostly unanswered. Eloquent leaders defend individual programs, but too rarely defend the vital need for effective governance. Politicians facing electoral pressures participate in a spiral of silence. Chastened by government’s low standing, they reinforce rather than challenge it. In our nation’s deafening political debate, the divide is ultimately over what government can and should do. But, as the journalist Michael Tomasky asks, “What kind of debate about this have we had? We’ve had one side relentlessly attacking government as incompetent to evil, and the other side saying nothing, being too cowed to stand up and say that government is, and does, good.”</p>
<p>Rhetoric is only one part of problem. Cowed policymakers also design programs that send much the same message. The political scientist Suzanne Mettler has documented the increasing tendency to “submerge” policies so the role of government is hidden from those who receive benefits. These subterranean policies include tax breaks for private savings for education and retirement, as well as reliance on private companies and contractors even where these proxies are less efficient than public provision. These submerged benefits are usually bad policies, but they are even worse politics. <span class="pullquote-right">Voters who don’t recognize government are not likely to appreciate what government does.</span> Nor are they likely to form an accurate picture of government’s role, seeing only its visible redistribution but not the vast numbers of ways in which it enables prosperity.</p>
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<p><strong>Frustration with contemporary governance</strong> is understandable. American government <em>has</em> become less effective. The lawmaking process <em>has </em>become dysfunctional. Public policy <em>is</em> more beholden to narrow and deep-pocketed interests. Political attacks and pervasive public distrust make government less capable, which in turn provides fodder for more attacks and greater distrust. That this vicious cycle has been pushed along by the smear attacks and sabotage campaigns does not make it any less real. We face a profound crisis of authority—not because government is out of control, but because it is not in control in the places where it matters. </p>
<p>Nonetheless, our assessment of government has declined far more than has actual performance. When, in 2014, Princeton University Press released a book entitled <em>Why Government Fails So Often: And How It Can Do Better</em>, hardly anyone bothered to question the premise. Yet the book, by law professor Peter Schuck, never justifies its scathing title. It leans heavily on one thin source covering only a narrow range of policies. It concedes that Social Security, the largest single domestic program, is an unquestionable success (as was the GI Bill and the interstate highway system). Perhaps most important, it falls into the common trap of comparing government policies to standards of efficiency and value that many markets fail to approach. The book complained, for example, that Medicare is more costly than it should be (which is certainly true), but it fails to even mention that it has lower and slower-growing costs than private insurance does, or that other countries that rely on the public sector more do much better.</p>
<p>Government often performs tasks less well than it could or should. That doesn’t mean, however, that we would be better off without government performing those tasks. In fact, the net benefits of modern government are enormous—at the level of major programs and, even more clearly, at the level of governance as a whole. We should be critical of government performance when it falls short, as we should be critical of big corporations and the functioning of private markets when they do. But we should be <em>appropriately </em>critical. Government sweats the big stuff: the hard challenges that decentralized private action can’t solve, the essential investments that market actors won’t make, the vexing choices that individual minds don’t handle well. It must be judged with an understanding of that role and with an appreciation of why it is so difficult and so vital to carry out. </p>
<p>Consider the most maligned policy of recent years: the Affordable Care Act. Even as the law has expanded health coverage while moderating costs, critics continue to spew out disinformation and insist their direst predictions have come true (and get a respectable hearing from the news media). They claim millions are losing good insurance despite a historic <em>expansion</em> of coverage. They claim costs are skyrocketing despite a historic <em>slowdown</em> of medical inflation. Among soft Randians like Pete Peterson, who warn loudly of our impending fiscal collapse, the huge decline of medical inflation should be a major cause for celebration. Instead, deficit hawks have been largely silent. They continue to insist on the right kind of cost containment—that is, the kind that limits citizens’ benefits, rather than the kind that diminishes the modern robber barons’ rents.</p>
<p>Given all this, it’s no surprise that Americans know strikingly little about the most important social policy breakthrough of the past half-century. Asked how the actual cost of the law compares with estimates prior to enactment, roughly 40 percent admitted they had no idea. Another 40 percent thought costs were <em>higher</em> than predicted. Only 8 percent knew that costs were substantially lower than anticipated. <span class="pullquote-right">Here, as in so many areas, voters have a limited understanding of government performance, receive scant guidance from the media, and are encouraged by a barrage of negativity to assume the worst.</span> In the 2014 election campaign, anti-ACA ads outnumbered favorable ones by a ratio of 13 to 1.</p>
<p>The point is not to be uncritical of the public sector. There are clear examples of government overreach: The national security state has threatened our liberties as well as protected them, and our criminal justice policies impose enormous burdens on poor and minority communities that are disproportionate to the benefits for community safety. Rent seeking is not only a corporate pursuit, even if business rent seeking has the highest price tag. Labor unions in the public sector, particularly within our essential but under-performing education system, have too often stood in the way of sensible reforms that would bring American practices in line with those of the most successful systems. The U.S. proclivity for what the political scientist Robert Kagan calls “adversarial legalism”—highly contentious and complex processes for adjudicating societal disputes—carries undeniable costs for our economy even as it benefits some sections of the legal profession along with those they represent. Sometimes better governance will mean more expensive government, but in many cases, more effective government could cost less, especially in the long run. We should be committed to rooting out rent seeking and remedying government missteps in all their forms.</p>
<p>But we should also recognize just how valuable the mixed economy is, how fundamental the role of government is within it, and how badly we are served by the misleading juxtapositions that dominate public debate—markets versus the state, freedom versus tyranny, free enterprise versus big government. From a more realistic and historically grounded starting point, we can have vigorous, reasoned, fact-based debates that reflect the diversity of our values and priorities as well as the inevitable uncertainties about the best ways to tackle complex problems. We can seek positive-sum bargains and broad consensus about how to improve the mixed economy and address new challenges, learning over time how to adjust the nimble fingers of the market and the strong thumb of government to best grasp our future.</p>
<p>To get to that more realistic starting point will require a serious and prolonged investment in ideas. The crisis of public authority is a consequence of orchestrated, persistent efforts to tear down government and a long spiral of silence in response. To shake free of that amnesia and rebalance our national conversation will take leadership and activism over many years to rebuild the intellectual and organizational foundations of effective public authority. The idea that one visionary figure can restore a more balanced politics is alluring but illusory. We need such men and women, but as President Obama’s experience suggests, even the nation’s most powerful politician requires a strong coalition to transform rhetoric into reality. Reform must be a multi-front interdependent effort of the sort we have been discussing, in which robust but realistic reforms steadily build trust and momentum toward a revitalized mixed economy.</p>
<p>In any battle of ideas, organizations are at least as important as individuals, scripts as important as speakers. When conservative business leaders like Charles and David Koch invested in Cato, Heritage, the American Enterprise Institute, and all the other intellectual weapons of the right, they were playing the long game. When Republican political leaders like Newt Gingrich and Mitch McConnell developed new strategies for tearing down American government to build up GOP power, they were playing the long game. Those who believe we can and must build a mixed economy for the twenty-first century—they need to play the long game, too. And they need to speak not just on behalf of individual policy goals. They need to speak on behalf of effective public authority.</p>
<p>A government that effectively promotes human flourishing is a government worth fighting for. More than ever, the problems we face demand a sustained and principled defense of a vital proposition: The government that governs best needs to govern quite a bit. Americans must remember what has made America prosper.</p>
</div></div></div>Fri, 01 Apr 2016 09:00:58 +0000224526 at http://prospect.orgJacob S. HackerPaul PiersonNo Cost for Extremismhttp://prospect.org/article/no-cost-extremism-0
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>According to the news media, 2014 was the year that the GOP “Establishment” finally pulled Republicans back from the right-wing brink. Pragmatism, it seemed, had finally triumphed over extremism in primary and general election contests that <em>The New York Times</em> called “proxy wars for the overall direction of the Republican Party.”</p>
<p>There’s just one problem with this dominant narrative. It’s wrong. The GOP isn’t moving back to the center. The “proxy wars” of 2014 were mainly about tactics and packaging, not moderation. Consider three of the 2014 Senate victors—all touted as evidence of the GOP’s rediscovered maturity, and all backed in contested primaries by the Establishment’s heavy, the U.S. Chamber of Commerce:</p>
</div></div></div>Tue, 21 Apr 2015 21:43:46 +0000222118 at http://prospect.orgJacob S. HackerPaul PiersonNo Cost for Extremismhttp://prospect.org/article/no-cost-extremism
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><em>This article appears in the Spring 2015 issue of </em>The American Prospect <em>magazine. </em><em style="line-height: 1.538em;">And <a href="http://act.prospect.org/page/s/25thanniversary">click here</a> for a free PDF of this 25th Anniversary Issue of the </em><span style="line-height: 1.538em;">Prospect</span><em style="line-height: 1.538em;">.</em></p>
<p><span class="dropcap">A</span>ccording to the news media, 2014 was the year that the GOP “Establishment” finally pulled Republicans back from the right-wing brink. Pragmatism, it seemed, had finally triumphed over extremism in primary and general election contests that <em>The New York Times</em> called “proxy wars for the overall direction of the Republican Party.”</p>
<p>There’s just one problem with this dominant narrative. It’s wrong. The GOP isn’t moving back to the center. The “proxy wars” of 2014 were mainly about tactics and packaging, not moderation. Consider three of the 2014 Senate victors—all touted as evidence of the GOP’s rediscovered maturity, and all backed in contested primaries by the Establishment’s heavy, the U.S. Chamber of Commerce:</p>
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<p>Thom Tillis in North Carolina (a “purple” state at the presidential level) moved to the Senate from being Speaker of the House in North Carolina, where he had been a central player in the state’s sharp right turn. A strong ally of multi-millionaire Art Pope, an arch-conservative and member of the Koch brothers’ inner circle, Tillis sits on the national board of directors of the right-wing American Legislative Exchange Council (ALEC), which in 2011 selected him as its “legislator of the year.”</p>
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<p>Joni Ernst in Iowa (another purple state), touted for her just-plain-folks demeanor and service in Iraq, also has an impressive record of extremist policy positions. During the primary, she called for abolishing the Department of Education, the Internal Revenue Service, and the Environmental Protection Agency, and indicated her support for a proposal that would allow Iowa officials to nullify the Affordable Care Act and arrest federal officials who tried to enforce it.</p>
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<p>Tom Cotton, who got the Chamber’s backing in Arkansas, opposed the 2014 farm bill—because it didn’t cut food stamps enough. About the program’s beneficiaries, he said, “They have steak in their basket, and they have a brand-new iPhone, and they have a brand-new SUV.” He voted to voucherize Medicare and raise the Social Security retirement age to 70, and even opposed a resolution of the debt-ceiling crisis, saying that to do otherwise would be “cataclysmic” and default would only create a “short-term market correction.”</p>
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</ul><p>Indeed, based on voting records, the current Republican majority in the Senate is far more conservative than the last Republican majority in the 2000s. Meanwhile, the incoming House majority is unquestionably the most conservative in modern history, continuing the virtually uninterrupted 40-year march of the House Republican caucus to the hard right.</p>
<p>The GOP’s great right migration is the biggest story in American politics of the past 40 years. And it’s not just limited to Congress: GOP presidents have gotten steadily more conservative, too; conservative Republicans increasingly dominate state politics; and the current Republican appointees on the Supreme Court are among the most conservative in the Court’s modern history. The growing extremism of Republicans is the main cause of increasing gridlock in Washington, the driving force behind the rise in scorched-earth tactics on Capitol Hill, an increasing contributor to partisan conflict and policy dysfunction at the state level, and the major cause of increasing public disgust with Washington—which, not coincidentally, feeds directly into the Republicans’ anti-government project.</p>
<p>It’s also deeply puzzling. Republicans are gaining more influence even though Americans seem less satisfied with the outcomes of increased Republican influence. Poll after poll shows that major GOP positions are not all that popular. Among swing voters, there has been nothing like the party’s right turn. Political scientists often suggest that the “median voter” runs the show, but on basic economic issues, people at the center of the ideological spectrum express views similar to those of the typical voter a generation ago. On many social issues, such as gay marriage, middle-of-the-road voters have actually moved left. Yet the Republican Party keeps heading right.</p>
<p>Nor is it tenable to argue that Republicans pay no electoral price because the Democrats have raced to the left as quickly as they’ve headed right. Figuring out exactly where parties stand isn’t easy. But widely respected measures of ideology based on congressional votes show Republicans moving much farther right than Democrats have moved left. (When you look at the positions that presidents take on congressional legislation, you also find that Democratic presidents have become more moderate even as Republican presidents have become more extreme.) While Democratic politicians have tacked left on some social issues—mostly where public opinion has, too—the party is arguably more moderate on many economic issues than it was a generation ago: friendlier to high finance, more venerating of markets, more cautious about taxes. It is the core of the Republican Party that has transformed. <span class="pullquote">And yet, contrary to expectations that swing voters will punish them for their extremism at the polls, they just keep on going.</span></p>
<p>In a 50-50 nation, Republicans have learned how to have their extremist cake and eat it too. Figuring out how they’ve pulled off this feat is the key to understanding what has gone wrong with American politics—and how it might be fixed.</p>
<h3>What Happened to the Median Voter?</h3>
<p>That the Republican Party has grown more conservative is not exactly breaking news. Yet journalists routinely fail to point out just how significant the shift has been. When Senator Richard G. Lugar of Indiana was defeated by a Tea Party opponent in a GOP primary in 2012, commentators lamented the loss of “a collegial moderate who personified a gentler political era,” as the <em>Times</em> put it. Yet, as the political scientist David Karol rightly countered, what moderate? When Lugar joined the Senate in 1977, he was on the <em>conservative</em> end of the party—to the right not only of middle-of-the-road Republicans, but even relatively conservative senators such as Robert Dole and Ted Stevens. By the time of Lugar’s defeat, he was indeed at the moderate end of the party, but this had very little to do with any movement on Lugar’s part. The depiction of him as a “moderate” is akin to that eerie sensation you get when a train passes you while your train isn’t moving—scientists call it “vection.” The long-timers aren’t really moving left; they’re being left behind as their party moves right.</p>
<p>You feel political vection a lot these days. Newt Gingrich went from the right fringe of the party to the center before he was ousted from the leadership. John Boehner, now the Establishment pleader-in-chief, was significantly to the right of Gingrich when he entered Congress. Today, pundits wonder whether the “moderate” Jeb Bush can attract enough GOP conservatives to win the presidential nomination. (He might—presidential nominations are the one place where centrist GOP voters have some sway.) But when he started out in electoral politics in the 1990s, as Alec MacGillis recently wrote in <em>The New Yorker</em>, he was clearly on the conservative side of the GOP and to the right of his brother George. Jeb was a self-described “head-banging conservative” who said he would “club this government into submission.” He has mellowed a little, but mostly it’s that his party has gotten more hyper.</p>
<p>Today, mainstream Republicans denounce positions on health care, climate legislation, and tax policy that were once mainstream within the party. Leading figures in the GOP embrace rhetorical themes—state nullification of federal laws, the wholesale elimination of cabinet departments, “makers” versus “takers”—that were only recently seen as beyond the pale. Under pressure to appear neutral and play up conflict, the news media like to focus on the divide at any moment between the GOP’s right fringe and its more moderate members. But look at American politics as a moving picture and you see an ongoing massive shift of the whole GOP (and, with it, the “center” of American politics) toward the anti-government fringe.</p>
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<p>John Boehner (left), who was significantly to the right of Newt Gingrich (right) when he entered Congress in 1991, is now the Establishment pleader-in-chief. Gingrich moved from the right fringe of the GOP to the center before he was ousted in 1998. </p>
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<p>To understand the puzzle that this raises for political analysts, it helps to be familiar with the most famous concept in American electoral studies: the median voter. The idea comes from the economist Anthony Downs, who in the 1950s drew on research about where stores were located relative to the distribution of consumers. Downs’s simple insight was that politicians in a two-party system have strong incentives to position themselves in the middle, right next to their opponents. The prediction looked pretty good in the age of Dwight Eisenhower and congressional bipartisanship, and the “median voter theorem” was born.</p>
<p>The median voter theorem allowed for a reassuring conclusion: Politicians who win must be pursuing the preferences of the middle-of-the-road voter. In the “equilibrium” created by competitive elections, voter preferences and the aims of elected officials align. Thus politicians who persistently don’t do what the theorem predicts raise not one but two fundamental questions: Why do they head to the extremes? And how do they get away with it? In other words, you need both <em>motive</em> and <em>opportunity</em> to knock off the median voter.</p>
<h3>The Proof Isn’t in the Pudding</h3>
<p>The median voter theorem may seem ridiculous today. But, in fact, it lurks behind much of the commentary on elections in professional and popular publications. Implicit in the endless attempts to explain why swing voters side with Republicans is a simple assumption: Republicans are winning elections and so they must be doing what a majority of voters want. The proof of voter preferences is in the pudding of electoral results.</p>
<p>Consider the recent thoughtful commentary on the 2014 election by John B. Judis, the journalist who (along with Ruy Teixeira) gave Democrats the greatest hope that demographic and economic shifts heralded an “emerging Democratic majority.” In his new salvo, published in <em>National Journal</em>, Judis says the prospect of such a majority was an illusion. Republicans are not just pulling in the usual suspects: evangelicals, working-class whites, Tea Partiers. They’re also attracting the broader white middle class. These voters would “probably not vote for a Republican who was openly allied with the Religious Right,” says Judis. But they are “willing to support an antiabortion Republican” if that’s not the main selling point. Most important, while “not unbendingly opposed to government,” “they are worried about overspending and taxes” and hence willing to back the GOP.</p>
<p>Like most analysts, Judis starts with the unstated belief that if Republicans are winning, they must be reaching moderate voters with their policy stances. But that assumption is unwarranted. First, Judis passes quickly over an absolutely critical aspect of Republicans’ advantage—turnout. If everyone votes, the median voter is the typical American citizen. But not everyone votes, and turnout in midterm elections is particularly low (historically so in 2014). In the past, that did not matter as much as it does today. The midterm electorate has always been smaller, but it has not always been so disproportionately Republican. High-turnout voters, such as the aged, have increasingly sided with the GOP, while the young and minority voters in Teixeira and Judis’s “emerging Democratic majority” have the lowest turnout rates, especially in midterm years. This, in fact, is one explanation for Republicans’ big statehouse edge. Though not widely noted, governors are overwhelmingly elected in non-presidential-election years, when turnout is much lower, even across different groups. Only nine states hold gubernatorial elections alongside the presidential election.</p>
<p>And it’s not just turnout that drives a wedge between citizens’ preferences and election results. In the House, gerrymandering and the electorally inefficient distribution of Democratic voters (with high concentrations in urban areas) give the GOP a sizable structural advantage. In 2012, a high-turnout year, Mitt Romney received a majority of votes in 226 congressional districts versus Obama’s 209. In the Senate, the lean of low-population states toward the Republicans has a similar effect. The 54 Republicans in the Senate won their seats with fewer total votes across the last three elections than the 46 Democrats (who also represent a larger total population). This is another reason why the fortunes of the GOP are so different between congressional contests and the presidential race.</p>
<p>It’s also the beginning of an explanation for why individual Republicans have the motive and opportunity to move so far right. In many congressional districts and red states, GOP politicians need to worry first and foremost about primary challenges. For these Republicans, the district median voter is less important than the Republican median voter.</p>
<p>Still, this doesn’t explain why even extremely conservative Republicans don’t face challenges from moderates within the party (in contrast, Democrats are routinely challenged by other Democrats to their right). And it certainly doesn’t mean that the Republican Party faces no electoral risks from its members’ continuing rightward lurch. Parties are collective organizations that balance what’s good for their individual members with what’s good for the growth and survival of the whole. In theory, when individual Republicans adopt stances way to the right of the typical voter, the party brand is tarnished and candidates in contested races lose, especially at the presidential level. <span class="pullquote">What makes the GOP shift so remarkable, and so harmful to the workings of American democracy, is that it has proved so sustainable.</span></p>
<p>To understand why, we must first figure out where the <em>motive</em> for heading right is coming from.</p>
<h3>The Race to the Base</h3>
<p>Conventional images of the two parties see them as symmetrical reflections of each other. But when it comes to the activist core of the parties, there is no comparison. The Republican base is larger, more intense, better organized, and fueled by distinctive partisan media outlets that make those on the other side look like pale imitations. Strong liberals are often motivated primarily by one issue—the environment, say, or abortion, or minority rights. Strong conservatives tend to describe themselves as part of a broad effort to protect a way of life. Even during the George W. Bush presidency, liberals wanted Democratic Party leaders to take moderate positions and expressed a strong desire for compromise. Conservatives consistently indicate they want Republicans to take <em>more</em> conservative positions and never, ever compromise with opponents.</p>
<p>Not surprisingly, self-described conservatives also show up when it counts. Whatever the form of participation—voting, working for candidates, contributing to campaigns—the GOP base does more of it than any other group. At the same time, the ideological distance between the party’s most active voters and the rest of the party’s electorate is greater on the GOP side than the Democratic side. Democratic activists are moderate as well as liberal (and occasionally even conservative). Republican activists are much more consistently conservative, even compared with other elements of the GOP electoral coalition.</p>
<p>Nonetheless, the imbalance in prevalence and intensity between self-identified liberals and self-identified conservatives hasn’t changed much in 35 years—even as the role of the Republican base in American politics has changed dramatically. Something has happened that has given that base a greater weight and a greater focus on “Washington” as the central threat to American society.</p>
<p>Here, we need to turn our attention from the GOP’s most committed voters to the organized forces that have jet-propelled the GOP’s rightward trip. Even the most informed and active voters take their cues from organizations and elite figures they trust. (Indeed, there’s strong evidence that such voters are <em>most</em> likely to process information through an ideological lens.) The far right has built precisely the kind of organizations needed to turn diffuse and generalized support into focused activity on behalf of increasingly extreme candidates.</p>
<p>Those organized forces have two key elements: polarizing right-wing media and efforts by business and the very wealthy to backstop and bankroll GOP politics. Pundits like to point to surface similarities between partisan journalists on the left and right, but the differences in scale and organization are profound. The conservative side is massive; describing its counterpart on the left as modest would be an act of true generosity.</p>
<p>At the heart of the conservative outrage industry, of course, is Fox News. Fox’s role as an ideological platform is unparalleled in modern American history. Its leading hosts reach audiences that dwarf their competitors’. The network plays a dominant role for its audience that is unique. And Fox is also distinguished by extraordinarily tight connections to the Republican Party—linkages, again, that have no parallel among Democrats.</p>
<p>What’s most remarkable is that Fox is just the beginning. The other citadel of the conservative media empire is talk radio, and if cable news looks like a lopsided teeter-totter, talk radio is that teeter-totter with a 16-ton weight attached to the right-hand side. Conservative on-air minutes outnumber liberal ones by a ratio of at least 10 to 1, and <em>all</em> of the major nationally syndicated shows are conservative. Just the top three have a combined weekly audience of more than 30 million. Moreover, the number of talk radio stations has tripled in the last 15 years.</p>
<p>The impact of all this is difficult to calculate. After all, Republicans were moving right even before Fox came on the scene, and much of Fox’s audience consists of people who already have strong political views. Even so, a recent, innovative study by scholars at Emory and Stanford finds that Fox News exposure added 1.6 points to George W. Bush’s vote in the 2000 election—more than enough to cost Al Gore the presidency. And this excludes the impact of talk radio and Fox’s further expansion since 2000. Arguably, however, the bigger impact of conservative media is to increase and focus intensity within the Republican base, sending compelling messages that build audience trust while insulating that audience from contrary information.</p>
<p>Flanking conservative media is a vastly expanded political infrastructure advancing a right-wing economic agenda and rewarding politicians who maintain fealty to the cause. Some analysts have stressed divisions between Establishment and Tea Party wings. But while differing over tactics and a handful of issues, the two large networks dominating GOP finances—the Chamber of Commerce and the Karl Rove–led network, on the one hand, and the Koch brothers network, on the other—overlap and agree far more than they conflict. These networks have coordinated their efforts in recent general elections and now provide organizational and financial support on a scale that makes them virtual political parties in their own right. The Koch network alone has announced plans to raise nearly $1 billion for the 2016 elections.</p>
<p>In short, the Republican base generates an exceptionally strong gravitational pull, and that pull takes politicians much farther from the electoral center than do the comparatively weak forces on the left of the Democratic Party.</p>
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<p>The Shadow of Sen. Ted Cruz, R-Texas is cast onto the ceiling as he speaks during the Conservative Political Action Conference (CPAC) in National Harbor, Md., Thursday, Feb. 26, 2015. </p>
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<h3>Shark Attacks and Voters</h3>
<p>Republicans, then, have a strong <em>motive</em> to move right. And we have seen that they have greater <em>opportunity</em> to do so because of uneven turnout and favorable apportionment. Still, as Judis suggests, Republicans are winning over many centrist voters, including many who express positions on specific policy issues that are relatively moderate. How have Republicans managed to escape the iron law of the median voter theorem: move to the center or lose?</p>
<p>Part of the explanation is that electoral accountability is far from perfect. As the political scientists Christopher Achen and Larry Bartels have documented, politicians are often punished for things they do not control, such as weather and momentary economic shifts. Misplaced accountability is a vital issue in electoral democracies. Where voters systematically make major mistakes, accountability vanishes. And without accountability, politicians don’t have to worry so much about being responsive to voters.</p>
<p>Call it the “shark attack” problem. In July 1916, a series of shark attacks on the Jersey shore left four people dead and prompted a media frenzy. (Sixty years later, the events would become the basis for the movie <em>Jaws</em>.) Four months afterward, Woodrow Wilson ran for re-election. On the Jersey shore, his vote was down three points.</p>
<p>Political scientists have found many examples of the shark attack problem:</p>
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<p>Voters are often only dimly aware of the policy positions and legislative actions of politicians, and politicians can do many things to diminish what awareness they have. (UCLA’s Kathleen Bawn and her colleagues call this “the electoral blind spot.”)</p>
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<p>Voters often have a hard time distinguishing more moderate candidates from more extreme ones. The mainstream media’s horse-race orientation and strong incentive to maintain an appearance of neutrality often make journalists unwilling to describe one party or candidate as more extreme than the other.</p>
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<p>Voters make decisions on the basis of factors (such as the very recent performance of the economy) that are unrelated to the policy stances of politicians.</p>
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<p>Voters may be increasingly willing to support the candidate perceived to be on “their” team rather than the one whose policy positions are closer to their own.</p>
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<p>Given the intensity of the base, extremism may generate compensating support (in money, endorsements, or enthusiasm) that offsets any potential lost ground among moderates.</p>
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</ul><p>All these factors suggest that we shouldn’t assume—in the style of evolutionary biology—that Republicans are winning because they are a better fit with voters’ beliefs. But Judis is right about one thing: Voters are a lot more fed up with government. And here we come to another depressing fact about accountability in America’s distinctive political system: The anti-government party has a huge advantage.</p>
<h3>Cracking the Code of American Politics</h3>
<p><span style="line-height: 1.538em;">The shark story seems absurd, random, and of limited relevance. But imagine what would happen if political actors could actually make shark attacks happen. And imagine if they could also have those attacks attributed to their opponents. Sounds preposterous, right? But our political institutions make something like this possible.</span></p>
<p>In a parliamentary system, legislative majorities govern, and those majorities are accountable for the results. Voters know who is governing and how to reward and punish. Our political system instead combines increasingly well-organized, parliamentary-style parties with a division of governmental powers. That dispersal of authority simultaneously makes governing difficult and accountability murky. It also creates opportunities for a party that is willing to cripple the governing process to gain power. And over the past generation, a radicalizing GOP has done precisely that, making American politics ever more dysfunctional while largely avoiding accountability for its actions.</p>
<p><span class="pullquote">Indeed, the most distinctive and damaging feature of Republicans’ right turn is that they have steadily ramped up the scale, intensity, and sophistication of their attacks on government and the party most closely associated with it. </span>The legal scholar Mark Tushnet calls these tactics “constitutional hardball.” From between-census redistricting to open attempts at Democratic vote suppression, from repeated budget shutdowns to hostage-taking over the debt ceiling, from the routine use of the filibuster to block legislation and nominations to open attempts to cripple executive bodies already authorized by law, the GOP has become, in the apt words of Thomas Mann and Norman Ornstein, “an insurgent outlier in American politics”—a party willing to tear down governance to gain larger majorities in government.</p>
<p>Appropriately for a party increasingly geared not to governing but to making governance impossible, the two leaders of this transformation were not in the White House but in Congress: Newt Gingrich and Mitch McConnell. Gingrich liked to describe himself as a “transformative figure”—and he was. His political genius was to sense that if voter anxieties and anger could be directed at government and the majority party that ostensibly ran it, power would come. Achieving this goal required simultaneously ratcheting up dysfunction and disgust while more sharply distinguishing the GOP as the anti-government party.</p>
<p>Gingrich and his allies adopted a posture of pure confrontation. The goal was to drag the Democrats into the mud, and if some mud got on the Republicans, well, they were the minority and, besides, they were not the party of Washington. In 1988, in a speech to the Heritage Foundation, Gingrich described a “civil war” with liberals that had to be fought “with a scale and a duration and a savagery that is only true of civil wars.” He meant it.</p>
<p>Fatefully, Gingrich also went to war with moderate Republicans. (His faction liked to joke that only two groups were against them: Democrats and Republicans.) He led a rebellion against the first Bush administration’s efforts to reach across the aisle, hobbling the president’s 1992 re-election campaign before it had even started. Once the elder Bush was out of the White House, it became even easier to pursue a strategy of uncompromising opposition and scandal-mongering. Obstruction and vituperation became a twofer. With a Democratic president, the Republican assault not only weakened an opponent but promoted the sentiment that politics and governance were distasteful. Association with “Washington” became increasingly toxic, and the Democrats were the party of Washington.</p>
<p>The second phase of Republicans’ anti-Washington strategy was engineered primarily by Mitch McConnell. Personally devoid of mass appeal, McConnell nonetheless has a rare understanding of the American voter. Early on in his leadership, he recognized that American political institutions create a unique challenge for voters. The complexity and opacity of the process—in which each policy initiative faces a grueling journey through multiple institutions that can easily turn into a death march—make it difficult to know how to attribute responsibility. Even reasonably attentive voters face a bewildering task of sorting out blame and credit.</p>
<p>McConnell fully embraced this opportunity after 2008. He organized the GOP caucus in a parliamentary fashion and worked to prevent individual party members from accepting compromise: “If [Obama] was for it,” “moderate” Senator George Voinovich explained, “we had to be against it.” Without Republican willingness to “play,” the imprimatur of bipartisanship was unavailable. Republicans could make the Democrats’ policy initiatives look partisan to voters and produce a pattern of gridlock and dysfunction that soured voters on government—and the party of government. American institutions, McConnell knew, gave Republicans a lot of capacity to impede governance without a lot of accountability.</p>
<p>On occasions, Republicans have overplayed their hand, as they did with the government shutdowns of 1995, the impeachment of Clinton in 1998, and the debt-ceiling debacle of 2011. But the GOP has escaped blame for the general decline of effective government. What voters get is a sense that the system is a mess and Washington can do little about pressing problems. If voters place blame anywhere, it is as likely as not to fall on the pro- rather than the anti-government party, and on the president, who is viewed as the country’s leader even if he has no capacity to pass laws or effectively promote bipartisanship when the GOP refuses to reciprocate.</p>
<p>Thus Judis is right to note that many moderately inclined Americans are now open to an anti-government message, fueled by their completely understandable distaste for contemporary Washington. This is not, however, because these voters have become more conservative. It reflects the GOP’s success in simultaneously activating and exploiting voter disgust. The deeper message of 2014 is that a radical GOP first drove government into the ditch, generating historically low approval ratings for Congress, and then reaped the benefits.</p>
<p>In short, Republicans have found a serious flaw in the code of American democracy. What they have learned is that our distinctive political system—abetted by often-feckless news media—gives an extreme anti-government party with a willingness to cripple governance an enormous edge. Republicans have increasingly united two potent forms of anti-statism: ideological and tactical. And they have found that the whole is much greater than the sum of the parts.</p>
<h3>Disrupting the Doomsday Machine</h3>
<p>By now, reform-minded commentators have offered every manner of political fix for our present political dysfunction. Some are silly—getting members of Congress to hang out after hours isn’t going to bring back a relatively moderate GOP. Others are sensible. Reducing the role of the filibuster would increase accountability, reduce gridlock, and make government more effective. Many reforms that would increase turnout (especially in midterm years) would also reduce the rewards of extremism. But these reforms are unlikely to be enacted as long as Republicans are in a position to stop them.</p>
<p>That’s why we believe that the vicious cycle of dysfunction, distrust, and extremism will require a long-term effort directed not just at formal rules but also at informal features of American politics. Republicans benefit from the decline of norms of moderation and fair play and from a deep public cynicism about government. To reverse the vicious cycle, Republicans have to be called out when they go too far, and voters need to be dissuaded from their anti-government skepticism and animus. <span class="pullquote">These are Herculean challenges, but not insurmountable ones. The key is to start heading in the right direction now.</span></p>
<p>Despite the evidence of increasing Republican extremism, elite discourse—in journalism, academia, and foundations—resists the notion that Republicans are primarily responsible for polarization and deadlock. To argue that one party is more to blame than another for political dysfunction is seen as evidence of bias, not to mention bad manners. Foundations will fund nonpartisan vote drives; they will not fund efforts to shame right-wing Republicans for crippling governance. Academics worry about seeming biased when the truly biased perspective is the one that treats the parties as equally extreme. And while Fox News takes an avowedly partisan line, most of the media world retreats into self-defeating denials of the truth that stares them in the face.</p>
<p>Consider what happened in 2013 when Mann and Ornstein, who had probably been the most quoted observers of Congress during the previous two decades, issued their well-documented critique, <em>It’s Even Worse Than It Looks: How the American Constitutional System Collided with the New Politics of Extremism</em>. The book emphasized the responsibility of the GOP for government dysfunction. After it came out, the authors were not quoted in the press or invited to the public affairs shows on which they had regularly appeared. As Mann explained, “I can no longer be a source in a news story in <em>The Wall Street Journal</em> or the <em>Times</em> or the <em>Post</em> because people now think I’ve made the case for the Democrats and therefore I’ll have to be balanced with a Republican.”</p>
<p>Balance is one thing when you are talking about ideological differences; it is dangerous when you are talking about basic facts of American political life. In too many crucial venues, the mainstream media’s desire to maintain the appearance of neutrality trumps the real need for truth-telling. The inevitable complexity of the governing process further increases the temptation to offer narratives that do not help more casual observers of our politics to determine accountability. This isn’t just bad journalism; it’s a green light for extremism.</p>
<p>Nowhere is this more true than with regard to the extreme anti-government tactics that have become such a central part of the GOP strategic repertoire. American political leaders in the past refrained from playing constitutional hardball not because it was legally impossible but because it was normatively suspect. Those norms were costly to breach; violators were subject to both public and private censure. Today, however, the price of hardball is effectively zero. For Republicans, indeed, it is often less than zero because the GOP gains so much from political dysfunction. Raising the price of these tactics requires opinion leaders to call out violations again. Journalists should treat partisan realities in the same way they should treat scientific disputes—by attending to the evidence.</p>
<p>Equally important, those who recognize the dangerous implications of extremism are going to have to make a concerted case for effective governance. Currently, Democrats are caught in a spiral of silence. No one defends government and government looks increasingly indefensible. Public life and government are seen as hopelessly gridlocked and corrupt, so they become more hopelessly gridlocked and corrupt. Even politicians who know that government has a vital role to play in making our society stronger have little incentive to make what is now an unpopular and unfamiliar case. Consider the almost complete silence of Democrats about the Affordable Care Act—a law that despite its limitations has unquestionably delivered considerable benefits to the majority of Americans. A 2014 study found that spending on anti—Obamacare ads since 2010 outpaced money spent for ads defending the law <em>15 to 1</em>. No wonder public opinion remains doubtful even as actual results of the law look more positive.</p>
<p>As difficult as it surely will be, there is no substitute for restoring some measure of public and elite respect for government’s enormous role in making society richer, healthier, fairer, better educated, and safer. To do that requires encouraging public officials to refine and express that case, and rewarding them when they do so. And it requires designing policies not to hide the role of government, but to make it both visible and popular. A tax cut that almost nobody sees, and which those who do see fail to recognize as public largesse, will make some Americans richer. It will not make them more trusting of government.</p>
<p>We are under no illusion about how easily or quickly our lopsided politics can be righted. But put yourself in the shoes of an early 1970s conservative and ask how likely the great right migration seemed then, when Richard Nixon was proposing a guaranteed income and national health insurance and backing environmental regulations and the largest expansion of Social Security in its history. Reversals of powerfully rooted trends that threaten our democracy take time, effort, and persistence. Yet above all they require a clear recognition of what has gone wrong.</p>
</div></div></div>Mon, 20 Apr 2015 20:51:04 +0000222110 at http://prospect.orgJacob S. HackerPaul PiersonPiketty's Triumphhttp://prospect.org/article/pikettys-triumph
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>In the 1990s, two young French economists then affiliated with the Massachusetts Institute of Technology, Thomas Piketty and Emmanuel Saez, began the first rigorous effort to gather facts on income inequality in developed countries going back decades. In the wake of the 2007 financial crash, fundamental questions about the economy that had long been ignored again garnered attention. Piketty and Saez’s research stood ready with data showing that elites in developed countries had, in recent years, grown far wealthier relative to the general population than most economists had suspected. By the past decade, according to Piketty and Saez, inequality had returned to levels nearing those of the early 20th century.</p>
<p>Last fall, Piketty published his magnum opus, <em>Capital in the Twenty-First Century</em>, in France. The book seeks to model the history, recent trends, and back-to-the-19th-century future of capitalism. <em>The American Prospect</em> asked experts and scholars in the field of inequality to weigh in on Piketty’s argument and potential impact for policymaking on our shores.</p>
<p>Jacob S. Hacker, director of the Institution for Social and Policy Studies and Stanley B. Resor Professor of Political Science at Yale, and Paul Pierson, the John Gross Professor of Political Science at the University of California at Berkeley, are the co-authors most recently of Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class. Heather Boushey is the executive director and chief economist at the Washington Center for Equitable Growth. Branko Milanovic is a visiting presidential professor at the Graduate Center, City University of New York, a visiting senior scholar at the Luxembourg Income Study Center, and the author of The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality.</p>
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<h2 align="left">A Tocqueville for Today</h2>
<p align="left">By Jacob S. Hacker and Paul Pierson</p>
<p>When Alexis de Tocqueville visited America in the early 1830s, the aspect of the new republic that most stimulated him was its remarkable social equality. “America, then, exhibits in her social state an extraordinary phenomenon,” Tocqueville marveled. “Men are there seen on a greater equality in point of fortune and intellect … than in any other country of the world, or in any age of which history has preserved the remembrance.”</p>
<p>To Tocqueville, who largely ignored the grim exception of the South, America’s progress toward greater equality was inevitable, the expansion of its democratic spirit unstoppable. Europe, he believed, would soon follow America’s lead. He was right—sort of. Democracy was on the rise, but so too was inequality. Only with the 20th century’s Great Depression, two terrible wars, and the creation of the modern welfare state did concentrations of economic advantage in rich democracies start to dissipate and the fruits of rapid growth begin to accrue generously to ordinary workers.</p>
<p>Now another Frenchman with a panoramic vista—and far more precise evidence—wants us to think anew about the progress of equality and democracy. Though an heir to Tocqueville’s tradition of analytic history, Thomas Piketty has a message that could not be more different: Unless we act, inequality will grow much worse, eventually making a mockery of our democratic institutions. With wealth more and more concentrated, countries racing to cut taxes on capital, and inheritance coming to rival entrepreneurship as a source of riches, a new patrimonial elite may prove as inevitable as Tocqueville once believed democratic equality was.</p>
<p>This forecast is based not on speculation but on facts assembled through prodigious research. Piketty’s startling numbers show that the share of national income coming from capital—once comfortingly believed to be stable—is on the rise. Private wealth has reached new highs relative to national income and is approaching levels of concentration not seen since before 1929.</p>
<p>Piketty’s powerful intellectual move is to place the subject of American income inequality in a broader historical and cross-national context. The forces most responsible for our egalitarian past, Piketty reminds us, were rapid growth—both of the population and of the economy overall. France never had the former, which is why it had a true “rentier” class of propertied aristocrats in the early 20th century when the United States was still a land of small-scale owners and the newly rich. Yet economic growth remains the biggest factor: When the economy expands modestly from year to year, returns on capital generally exceed the advance of labor income, and fortunes of the already rich grow while the rest of society falls behind.</p>
<p>Since the resurgence of income inequality, concerned observers have comforted themselves with the notion that holdings of wealth—while far more unequally distributed than income—are not amassing at the top as quickly as incomes are. If we look forward, however, that reassuring notion appears suspect. Some of the great fortunes made in the new gilded age will fund philanthropy or frivolity. Most, however, will be funneled back into capital investment or passed on to heirs. Piketty notes that the returns of such investments are invariably largest for those with the greatest wealth—the Matthew effect is another force for increasing concentration. Meanwhile, inheritances are returning as a major source of advantage for the already advantaged. As rising income inequality passes down through a narrowing demographic pyramid, we can expect wealth bequests to become an increasingly important source of inherited privilege.</p>
<p>Piketty is rightly pessimistic about an immediate response. The influence of the wealthy on democratic politics and on how we think about merit and reward presents formidable obstacles. Fierce international competition for the rich and their dollars leads Piketty to believe that without a serious countermovement, capital taxation will trend toward zero. Inequality is becoming a “wicked” problem like climate change—one in which a solution must not only overcome powerful entrenched interests in individual countries but must be global in scope to be effective.</p>
<p>Nonetheless, it is capital taxation, and ultimately global capital taxation, that Piketty sees as the eventual solution. Taxing only consumption and labor income violates the notion that citizens should finance the commonwealth on the basis of their ability to pay. A global capital tax—modest, progressive, based on transparency—could reinforce the fraying link between economic standing and individual contributions toward vital collective activities. Moreover, halting progress in this direction has already taken place, as rich countries seek—without great success so far—to crack down on the tax havens and corporate financial engineering that increasingly make taxes voluntary for the superrich. Because wealth is still so concentrated in advanced industrial nations, agreements that covered citizens of and transactions within Europe and North America would go a long way toward bringing these activities into the open. A modest tax on the largest fortunes might also encourage more productive uses of capital, gradually taxing away big estates with small returns.</p>
<p>Piketty suggests that the pressures for change will eventually prove overwhelming. Either ever-richer capitalists will tear one another apart in the race for diminishing returns, or the rest of society will rise up and impose a fairer framework. For a book that insists on the primacy of politics, however, Piketty has relatively little to say about how—with organized labor weakened, moneyed interests strengthened, and anti-government forces emboldened—the kind of political movement necessary for a fairer future will emerge. (It was war, after all, not universal suffrage, that ultimately tamed inequality in the 20th century.) Yet perhaps with this magisterial book, the troubling realities Piketty unearths will become more visible and the rationalizations of the privileged that sustain them less dominant. Like Tocqueville, Piketty has given us a new image of ourselves. This time, it’s one we should resist, not welcome.</p>
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<h2 align="left">Against U.S. Economic Clichés</h2>
<p align="left">By Heather Boushey</p>
<p><em>Capital in the Twenty-First Century</em> is written in the tradition of great economic texts. Where John Maynard Keynes wrote <em>The General Theory of Employment, Interest and Money</em> in reaction to the “classical economists” and Karl Marx wrote Das Kapital in reaction to the “bourgeois economists,” Thomas Piketty writes in reaction to the “U.S. economists.” Like his predecessors, he does not mince words. After taking a professorship at MIT at 22, he moved back to Paris at 25, in 1995, because “I did not find the work of U.S. economists very convincing.” Piketty’s method is an explicit critique of academics “too often preoccupied with petty mathematical problems of interest only to themselves.” While mathematical tools are critical to the modern economics profession, Piketty is right to call on all social scientists, including economists, to “start with fundamental questions and try to answer them.”</p>
<p>Piketty asks two fundamental questions in his new book: “What do we really know about how wealth and income have evolved since the eighteenth century, what lessons can we derive from that knowledge for the century now under way?” Piketty and his colleagues have spent recent years putting together a World Top Incomes Database, their detailed investigation into income in countries around the globe, spanning several decades. In some cases—France and the United Kingdom—he also relies on facts about the accumulation of wealth going back centuries. As he puts it, “It is by patiently establishing facts and patterns and then comparing different countries that we can hope to identify the mechanisms at work and gain a clearer idea of the future.”</p>
<p>Informed by this historical, cross-country data, Piketty evaluates—and rejects—a number of generally accepted conclusions in economic thought, while being careful to note the limitations of inevitably “imperfect and incomplete” sources. The main finding of his investigation is that capital still matters. The data show a recent resurgence in developed countries of the importance of capital income relative to national income, back to levels last seen before World War I. In Piketty’s analysis, without rapid economic growth—which he argues is highly unlikely now that population growth is slowing—returns from investment will continue to grow faster than output. Inheritances and income inequality will keep rising, possibly to levels higher than ever seen.</p>
<p>Among other conclusions, the data lead Piketty to describe the popular argument that we live in an era where our talents and capabilities matter most as “mindless optimism.” The data also lead him to reject the idea that wage inequality has grown as technological change increased the demand for higher-skilled, college-educated workers.</p>
<p>Instead, Piketty’s evidence suggests it is the rise of what he calls the “supermanager” among the top 1 percent since 1980 that is driving the rise in earnings inequality. It is here that Piketty takes his sharpest swipe at economists. In his discussion of the thriving top decile, he points out that “among the members of these upper income groups are U.S. academic economists, many of whom believe that the economy of the United States is working fairly well and, in particular, that it rewards talent and merit accurately and precisely. This is a very comprehensible human reaction.” Piketty agrees that in the long run, investments in education are an important component of any plan to reduce labor-market inequalities and improve productivity. But on their own they’re not sufficient.</p>
<p>This book is significant for its findings, as well as for how Piketty arrives at them. It’s easy—and fun—to argue about ideas. It is much more difficult to argue about facts. Facts are what Piketty gives us, while pressing the reader to engage in the journey of sorting through their implications.</p>
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<h2 align="left">Must We Return to “Pre-tamed” Capitalism?</h2>
<p align="left">By Branko Milanovic</p>
<p>Thomas Piketty’s <em>Capital in the Twenty-First Century</em> is a monumental book that will influence economic analysis (and perhaps policymaking) in the years to come. In the way it is written and the importance of the questions it asks, it is a book the classic authors of economics could have written if they lived today and had access to the vast empirical material Piketty and his colleagues collected.</p>
<p>Piketty’s key message is both simple and, once understood, almost self-evident. Under capitalism, if the rate of return on private wealth (defined to include physical and financial capital, land, and housing) exceeds the rate of growth of the economy, the share of capital income in the net product will increase. If most of that increase in capital income is reinvested, the capital-to-income ratio will rise. This will further increase the share of capital income in the net output. The percentage of people who do not need to work in order to earn their living (the rentiers) will go up. The distribution of personal income will become even more unequal.</p>
<p>The story elegantly combines theories of growth, functional distribution of income (between capital and labor), and income inequality between individuals. It aims to provide nothing less than the description of a capitalist economy.</p>
<p>Two questions can be asked: Why didn’t this model hold during the period of “the golden age” of capitalism (between approximately 1945 and 1975), when functional income distribution was stable and income inequality declined? Why does it matter for the 21st century? The answer to the first question is that the “short 20th century” was special. The physical destruction associated with two world wars led to a significant destruction of the advanced world’s capital stock. In addition, the advent of the welfare state, motivated by the Great Depression and strong socialist movements, imposed a need to heavily tax capital. The 20th century was thus different from the 19th. Through the action of wars and social movements, capitalism appeared to most social scientists to have been “tamed.” Piketty argues that this view turns out to have been wrong. The fundamental nature of capitalism was not altered—the external circumstances were different.</p>
<p>Why does Piketty’s model herald the return of “patrimonial capitalism” (the term he introduces to mean that an important part of the upper class receives income from property) in the 21st century? The reasons are the reverse of the ones that drove developments during the short 20th century. The period of prosperity after the end of World War II saw the rebuilding of large fortunes (owned, of course, by different people today); the capital-to-output ratio in advanced countries gradually rose back to the higher levels of prewar years. The Reagan-Thatcher revolutions of the 1980s reduced the taxation of capital, and of high incomes in general, and further increased the share of capital in net output. If this process continues, the return to features of 19th--century capitalism is inevitable.</p>
<p>The return is all the more likely since the rate of growth—at the technological frontier where most rich countries operate today, that rate is equal to the sum of “pure” technological progress and population growth—is decreasing. Once the convergence of Europe and Asia to U.S.-like levels of income is achieved, the rate of growth cannot exceed more than, say, 2.5 percent per annum (a combination of about 1.5 percent in technological progress and 1 percent in population growth). Piketty writes: “Decreased growth—especially demographic growth—is thus responsible for capital’s comeback.” If the rate of return on private wealth is higher than 2.5 percent, then the 19th-century-like effects of “pre-tamed” capitalism will reappear.</p>
<p> </p>
<p>Or will they? There are significant differences between the 19th century and ours that Piketty does not fully acknowledge, although he mentions them. First, it is not obvious that the rate of return on private wealth will remain high enough to sustain Piketty’s prediction. Even if we look at the admittedly transitory situation of today, the rate of return is stuck barely above zero percent, less than the rate of growth of the rich world’s economies. The tendency toward a decreasing rate of return, possibly lower than the rate of growth, cannot be ruled out.</p>
<p>Second, the role of labor incomes has changed since the 19th century. As Piketty acknowledges (he writes about it in both this and earlier works), extraordinarily high labor incomes play a larger role in society today than in the past, even if they concern mostly the richest 1 percent through 5 percent of income recipients—not the top 0.1 percent, where “capital is still king.” A dose of “meritocracy” has been introduced into the distribution. The overlap between being rich and owning capital so evident in the 19th century will be less prominent in the 21st.</p>
<p>Third—the convergence of China, and even more that of India, and even more that of Africa—may take a century or longer to complete. As long as the convergence is still ongoing, global growth will be higher than the steady-state rate of 2.5 percent due to the faster growth rate of “infra technological frontier” countries such as China, India, Nigeria, and Indonesia. This is an aspect of the problem that Piketty neglects. The former Third World might end up playing the same role in the 21st century that Europe, Japan, South Korea, and others played in the past 50 years—maintaining upward global growth as they were catching up with the United States.</p>
<p>So these are possible problems with Piketty’s analysis. But if we take it at its face value, what are the remedies he suggests? A global tax on capital—needed to curb the tendency of advanced capitalism to generate a skewed distribution of income in favor of property holders. The high taxation of capital, and of inheritance in particular, is not something new, as Piketty amply demonstrates. It is technically feasible since information on the ownership of most assets, from housing to stock shares, is available. (Piketty, by the way, provides lots of specific information on how the tax could be implemented. He also gives some notional rates: no tax on capital below almost 1.4 million dollars, 1 percent on capital between 1.4 million and 6.8 million dollars, and 2 percent on capital above 6.8 million dollars.) For such a global tax to be effective, however, a huge amount of coordination would be required among the leading countries—a task to whose challenges Piketty is not oblivious. Implementation by one or two countries, even the most important economies, could lead to capital flight. The main offshore tax havens would also have to cooperate, although they would lose hugely lucrative business. But an agreement across the Organisation for Economic Co-operation and Development on the uniform taxation of wealth, however farfetched it might seem today, should be put on the table. This is, in Piketty’s view, the only way to “regulate capitalism” and make both capitalism and democracy sustainable in the long run.</p>
<p>In a short review, it is impossible to do even partial justice to the wealth of information, data, analysis, and discussion contained in this book of almost 700 pages. Piketty has returned economics to the classical roots where it seeks to understand the “laws of motion” of capitalism. He has re-emphasized the distinction between “unearned” and “earned” income that had been tucked away for so long under misleading terminologies of “human capital,” “economic agents,” and “factors of production.” Labor and capital—those who have to work for a living and those who live from property—people in flesh—are squarely back in economics via this great book.</p>
</div></div></div>Tue, 25 Mar 2014 20:20:25 +0000220008 at http://prospect.orgJacob S. HackerPaul PiersonHeather BousheyBranko MilanovicPiketty’s Triumphhttp://prospect.org/article/piketty%E2%80%99s-triumph
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><span class="dropcap">I</span>n the 1990s, two young French economists then affiliated with the Massachusetts Institute of Technology, Thomas Piketty and Emmanuel Saez, began the first rigorous effort to gather facts on income inequality in developed countries going back decades. In the wake of the 2007 financial crash, fundamental questions about the economy that had long been ignored again garnered attention. Piketty and Saez’s research stood ready with data showing that elites in developed countries had, in recent years, grown far wealthier relative to the general population than most economists had suspected. By the past decade, according to Piketty and Saez, inequality had returned to levels nearing those of the early 20th century.</p>
<p>Last fall, Piketty published his magnum opus, <em>Capital in the Twenty-First Century</em>, in France. The book seeks to model the history, recent trends, and back-to-the-19th-century future of capitalism. <em>The American Prospect</em> asked experts and scholars in the field of inequality to weigh in on Piketty’s argument and potential impact for policymaking on our shores.</p>
<p>Jacob S. Hacker, director of the Institution for Social and Policy Studies and Stanley B. Resor Professor of Political Science at Yale, and Paul Pierson, the John Gross Professor of Political Science at the University of California at Berkeley, are the co-authors most recently of Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class. Heather Boushey is the executive director and chief economist at the Washington Center for Equitable Growth. Branko Milanovic is a visiting presidential professor at the Graduate Center, City University of New York, a visiting senior scholar at the Luxembourg Income Study Center, and the author of The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality.</p>
<p> </p>
<h2 align="left">A Tocqueville for Today</h2>
<p align="left">By Jacob S. Hacker and Paul Pierson</p>
<p>When Alexis de Tocqueville visited America in the early 1830s, the aspect of the new republic that most stimulated him was its remarkable social equality. “America, then, exhibits in her social state an extraordinary phenomenon,” Tocqueville marveled. “Men are there seen on a greater equality in point of fortune and intellect … than in any other country of the world, or in any age of which history has preserved the remembrance.”</p>
<p>To Tocqueville, who largely ignored the grim exception of the South, America’s progress toward greater equality was inevitable, the expansion of its democratic spirit unstoppable. Europe, he believed, would soon follow America’s lead. He was right—sort of. Democracy was on the rise, but so too was inequality. Only with the 20th century’s Great Depression, two terrible wars, and the creation of the modern welfare state did concentrations of economic advantage in rich democracies start to dissipate and the fruits of rapid growth begin to accrue generously to ordinary workers.</p>
<p>Now another Frenchman with a panoramic vista—and far more precise evidence—wants us to think anew about the progress of equality and democracy. Though an heir to Tocqueville’s tradition of analytic history, Thomas Piketty has a message that could not be more different: Unless we act, inequality will grow much worse, eventually making a mockery of our democratic institutions. With wealth more and more concentrated, countries racing to cut taxes on capital, and inheritance coming to rival entrepreneurship as a source of riches, a new patrimonial elite may prove as inevitable as Tocqueville once believed democratic equality was.</p>
<p>This forecast is based not on speculation but on facts assembled through prodigious research. Piketty’s startling numbers show that the share of national income coming from capital—once comfortingly believed to be stable—is on the rise. Private wealth has reached new highs relative to national income and is approaching levels of concentration not seen since before 1929.</p>
<p>Piketty’s powerful intellectual move is to place the subject of American income inequality in a broader historical and cross-national context. The forces most responsible for our egalitarian past, Piketty reminds us, were rapid growth—both of the population and of the economy overall. France never had the former, which is why it had a true “rentier” class of propertied aristocrats in the early 20th century when the United States was still a land of small-scale owners and the newly rich. Yet economic growth remains the biggest factor: When the economy expands modestly from year to year, returns on capital generally exceed the advance of labor income, and fortunes of the already rich grow while the rest of society falls behind.</p>
<p>Since the resurgence of income inequality, concerned observers have comforted themselves with the notion that holdings of wealth—while far more unequally distributed than income—are not amassing at the top as quickly as incomes are. If we look forward, however, that reassuring notion appears suspect. Some of the great fortunes made in the new gilded age will fund philanthropy or frivolity. Most, however, will be funneled back into capital investment or passed on to heirs. Piketty notes that the returns of such investments are invariably largest for those with the greatest wealth—the Matthew effect is another force for increasing concentration. Meanwhile, inheritances are returning as a major source of advantage for the already advantaged. As rising income inequality passes down through a narrowing demographic pyramid, we can expect wealth bequests to become an increasingly important source of inherited privilege.</p>
<p>Piketty is rightly pessimistic about an immediate response. The influence of the wealthy on democratic politics and on how we think about merit and reward presents formidable obstacles. Fierce international competition for the rich and their dollars leads Piketty to believe that without a serious countermovement, capital taxation will trend toward zero. <span class="pullquote">Inequality is becoming a “wicked” problem like climate change—one in which a solution must not only overcome powerful entrenched interests in individual countries but must be global in scope to be effective.</span></p>
<p>Nonetheless, it is capital taxation, and ultimately global capital taxation, that Piketty sees as the eventual solution. Taxing only consumption and labor income violates the notion that citizens should finance the commonwealth on the basis of their ability to pay. A global capital tax—modest, progressive, based on transparency—could reinforce the fraying link between economic standing and individual contributions toward vital collective activities. Moreover, halting progress in this direction has already taken place, as rich countries seek—without great success so far—to crack down on the tax havens and corporate financial engineering that increasingly make taxes voluntary for the superrich. Because wealth is still so concentrated in advanced industrial nations, agreements that covered citizens of and transactions within Europe and North America would go a long way toward bringing these activities into the open. A modest tax on the largest fortunes might also encourage more productive uses of capital, gradually taxing away big estates with small returns.</p>
<p>Piketty suggests that the pressures for change will eventually prove overwhelming. Either ever-richer capitalists will tear one another apart in the race for diminishing returns, or the rest of society will rise up and impose a fairer framework. For a book that insists on the primacy of politics, however, Piketty has relatively little to say about how—with organized labor weakened, moneyed interests strengthened, and anti-government forces emboldened—the kind of political movement necessary for a fairer future will emerge. (It was war, after all, not universal suffrage, that ultimately tamed inequality in the 20th century.) Yet perhaps with this magisterial book, the troubling realities Piketty unearths will become more visible and the rationalizations of the privileged that sustain them less dominant. Like Tocqueville, Piketty has given us a new image of ourselves. This time, it’s one we should resist, not welcome.</p>
<p> </p>
<h2 align="left">Against U.S. Economic Clichés</h2>
<p align="left">By Heather Boushey</p>
<p><em>Capital in the Twenty-First Century</em> is written in the tradition of great economic texts. Where John Maynard Keynes wrote <em>The General Theory of Employment, Interest and Money</em> in reaction to the “classical economists” and Karl Marx wrote Das Kapital in reaction to the “bourgeois economists,” Thomas Piketty writes in reaction to the “U.S. economists.” Like his predecessors, he does not mince words. After taking a professorship at MIT at 22, he moved back to Paris at 25, in 1995, because “I did not find the work of U.S. economists very convincing.” Piketty’s method is an explicit critique of academics “too often preoccupied with petty mathematical problems of interest only to themselves.” While mathematical tools are critical to the modern economics profession, Piketty is right to call on all social scientists, including economists, to “start with fundamental questions and try to answer them.”</p>
<p>Piketty asks two fundamental questions in his new book: “What do we really know about how wealth and income have evolved since the eighteenth century, what lessons can we derive from that knowledge for the century now under way?” Piketty and his colleagues have spent recent years putting together a World Top Incomes Database, their detailed investigation into income in countries around the globe, spanning several decades. In some cases—France and the United Kingdom—he also relies on facts about the accumulation of wealth going back centuries. As he puts it, “It is by patiently establishing facts and patterns and then comparing different countries that we can hope to identify the mechanisms at work and gain a clearer idea of the future.”</p>
<p>Informed by this historical, cross-country data, Piketty evaluates—and rejects—a number of generally accepted conclusions in economic thought, while being careful to note the limitations of inevitably “imperfect and incomplete” sources. The main finding of his investigation is that capital still matters. The data show a recent resurgence in developed countries of the importance of capital income relative to national income, back to levels last seen before World War I. In Piketty’s analysis, without rapid economic growth—which he argues is highly unlikely now that population growth is slowing—returns from investment will continue to grow faster than output. Inheritances and income inequality will keep rising, possibly to levels higher than ever seen.</p>
<p>Among other conclusions, the data lead Piketty to describe the popular argument that we live in an era where our talents and capabilities matter most as “mindless optimism.” The data also lead him to reject the idea that wage inequality has grown as technological change increased the demand for higher-skilled, college-educated workers.</p>
<p>Instead, Piketty’s evidence suggests it is the rise of what he calls the “supermanager” among the top 1 percent since 1980 that is driving the rise in earnings inequality. It is here that Piketty takes his sharpest swipe at economists. In his discussion of the thriving top decile, he points out that “among the members of these upper income groups are U.S. academic economists, many of whom believe that the economy of the United States is working fairly well and, in particular, that it rewards talent and merit accurately and precisely. This is a very comprehensible human reaction.” <span class="pullquote">Piketty agrees that in the long run, investments in education are an important component of any plan to reduce labor-market inequalities and improve productivity.</span> But on their own they’re not sufficient.</p>
<p>This book is significant for its findings, as well as for how Piketty arrives at them. It’s easy—and fun—to argue about ideas. It is much more difficult to argue about facts. Facts are what Piketty gives us, while pressing the reader to engage in the journey of sorting through their implications.</p>
<p> </p>
<h2 align="left">Must We Return to “Pre-tamed” Capitalism?</h2>
<p align="left">By Branko Milanovic</p>
<p>Thomas Piketty’s <em>Capital in the Twenty-First Century</em> is a monumental book that will influence economic analysis (and perhaps policymaking) in the years to come. In the way it is written and the importance of the questions it asks, it is a book the classic authors of economics could have written if they lived today and had access to the vast empirical material Piketty and his colleagues collected.</p>
<p>Piketty’s key message is both simple and, once understood, almost self-evident. Under capitalism, if the rate of return on private wealth (defined to include physical and financial capital, land, and housing) exceeds the rate of growth of the economy, the share of capital income in the net product will increase. If most of that increase in capital income is reinvested, the capital-to-income ratio will rise. This will further increase the share of capital income in the net output. The percentage of people who do not need to work in order to earn their living (the rentiers) will go up. The distribution of personal income will become even more unequal.</p>
<p>The story elegantly combines theories of growth, functional distribution of income (between capital and labor), and income inequality between individuals. It aims to provide nothing less than the description of a capitalist economy.</p>
<p>Two questions can be asked: Why didn’t this model hold during the period of “the golden age” of capitalism (between approximately 1945 and 1975), when functional income distribution was stable and income inequality declined? Why does it matter for the 21st century? The answer to the first question is that the “short 20th century” was special. The physical destruction associated with two world wars led to a significant destruction of the advanced world’s capital stock. In addition, the advent of the welfare state, motivated by the Great Depression and strong socialist movements, imposed a need to heavily tax capital. The 20th century was thus different from the 19th. <span class="pullquote">Through the action of wars and social movements, capitalism appeared to most social scientists to have been “tamed.” Piketty argues that this view turns out to have been wrong.</span> The fundamental nature of capitalism was not altered—the external circumstances were different.</p>
<p>Why does Piketty’s model herald the return of “patrimonial capitalism” (the term he introduces to mean that an important part of the upper class receives income from property) in the 21st century? The reasons are the reverse of the ones that drove developments during the short 20th century. The period of prosperity after the end of World War II saw the rebuilding of large fortunes (owned, of course, by different people today); the capital-to-output ratio in advanced countries gradually rose back to the higher levels of prewar years. The Reagan-Thatcher revolutions of the 1980s reduced the taxation of capital, and of high incomes in general, and further increased the share of capital in net output. If this process continues, the return to features of 19th--century capitalism is inevitable.</p>
<p>The return is all the more likely since the rate of growth—at the technological frontier where most rich countries operate today, that rate is equal to the sum of “pure” technological progress and population growth—is decreasing. Once the convergence of Europe and Asia to U.S.-like levels of income is achieved, the rate of growth cannot exceed more than, say, 2.5 percent per annum (a combination of about 1.5 percent in technological progress and 1 percent in population growth). Piketty writes: “Decreased growth—especially demographic growth—is thus responsible for capital’s comeback.” If the rate of return on private wealth is higher than 2.5 percent, then the 19th-century-like effects of “pre-tamed” capitalism will reappear.</p>
<p> </p>
<p><span class="dropcap">O</span>r will they? There are significant differences between the 19th century and ours that Piketty does not fully acknowledge, although he mentions them. First, it is not obvious that the rate of return on private wealth will remain high enough to sustain Piketty’s prediction. Even if we look at the admittedly transitory situation of today, the rate of return is stuck barely above zero percent, less than the rate of growth of the rich world’s economies. The tendency toward a decreasing rate of return, possibly lower than the rate of growth, cannot be ruled out.</p>
<p>Second, the role of labor incomes has changed since the 19th century. As Piketty acknowledges (he writes about it in both this and earlier works), extraordinarily high labor incomes play a larger role in society today than in the past, even if they concern mostly the richest 1 percent through 5 percent of income recipients—not the top 0.1 percent, where “capital is still king.” A dose of “meritocracy” has been introduced into the distribution. The overlap between being rich and owning capital so evident in the 19th century will be less prominent in the 21st.</p>
<p>Third—the convergence of China, and even more that of India, and even more that of Africa—may take a century or longer to complete. As long as the convergence is still ongoing, global growth will be higher than the steady-state rate of 2.5 percent due to the faster growth rate of “infra technological frontier” countries such as China, India, Nigeria, and Indonesia. This is an aspect of the problem that Piketty neglects. The former Third World might end up playing the same role in the 21st century that Europe, Japan, South Korea, and others played in the past 50 years—maintaining upward global growth as they were catching up with the United States.</p>
<p>So these are possible problems with Piketty’s analysis. But if we take it at its face value, what are the remedies he suggests? A global tax on capital—needed to curb the tendency of advanced capitalism to generate a skewed distribution of income in favor of property holders. The high taxation of capital, and of inheritance in particular, is not something new, as Piketty amply demonstrates. It is technically feasible since information on the ownership of most assets, from housing to stock shares, is available. (Piketty, by the way, provides lots of specific information on how the tax could be implemented. He also gives some notional rates: no tax on capital below almost 1.4 million dollars, 1 percent on capital between 1.4 million and 6.8 million dollars, and 2 percent on capital above 6.8 million dollars.) For such a global tax to be effective, however, a huge amount of coordination would be required among the leading countries—a task to whose challenges Piketty is not oblivious. Implementation by one or two countries, even the most important economies, could lead to capital flight. The main offshore tax havens would also have to cooperate, although they would lose hugely lucrative business. But an agreement across the Organisation for Economic Co-operation and Development on the uniform taxation of wealth, however farfetched it might seem today, should be put on the table. This is, in Piketty’s view, the only way to “regulate capitalism” and make both capitalism and democracy sustainable in the long run.</p>
<p>In a short review, it is impossible to do even partial justice to the wealth of information, data, analysis, and discussion contained in this book of almost 700 pages. Piketty has returned economics to the classical roots where it seeks to understand the “laws of motion” of capitalism. He has re-emphasized the distinction between “unearned” and “earned” income that had been tucked away for so long under misleading terminologies of “human capital,” “economic agents,” and “factors of production.” Labor and capital—those who have to work for a living and those who live from property—people in flesh—are squarely back in economics via this great book.</p>
</div></div></div>Mon, 10 Mar 2014 20:39:30 +0000220140 at http://prospect.orgJacob S. HackerPaul PiersonHeather BousheyBranko MilanovicPowell's Diagnosis—And Ourshttp://prospect.org/article/powells-diagnosis%E2%80%94and-ours
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><strong><em>This piece is part of the </em>Prospect'<em>s series on progressives' strategy over the next 40 years. To read the introduction, click <a href="http://prospect.org/article/strategic-plan-liberals">here</a>.</em></strong></p>
<p><span class="dropcap">T</span>he Powell Memo is remembered today as a blueprint for business counter-mobilization. So it’s easy to forget that one of Lewis Powell’s principal goals—and, it seems, achievements—was to wake up business leaders to the nature of the challenges they faced: the hostility in some campus quarters, the strength of foes like Ralph Nader, and, above all, the weakness of corporate political organization. Before he could get business leaders to act on his prescriptions, Powell had to convince them of his diagnosis.</p>
<p>A Powell Memo for us likewise has to get the diagnosis right. Today, progressives are having three main conversations—about organization, about messaging, and about policy. Each is crucial. But there’s an even more crucial conversation, and it’s the inverse of the one that Powell sought to start more than 40 years ago. Powell asked why business was losing politically. We need to ask why the American middle class is losing politically. Why is the American political system so weakly responsive to the policy preferences of the majority of Americans?</p>
<div style="width:250px;float:right;padding-left:5px;"><a href="http://prospect.org/article/strategic-plan-liberals"><img src="https://prospect.org/sites/default/files/stratplanlogo.png" /></a></div>
<p>Consider two linked contemporary debates: the fight over continued tax decreases for the rich and the struggle over how to deal with the deficit. In each case, the majority of Americans have repeatedly expressed views that are consistent with progressive priorities: letting the tax cuts for the rich expire, reducing defense spending, and protecting programs of economic security like Social Security and Medicare with revenue and cost-control measures rather than benefit cuts. In each case, there’s a good chance these priorities will be overruled by America’s political leaders. </p>
<p>Of course, it matters who the president is. But if the recent past is any prologue, public sentiment will matter a lot less than it should. The proximate cause of a capitulation on tax cuts will be the intense opposition of the Republican Party to any revenue increases; on spending priorities, it will be the bipartisan fixation with deficit reduction, the power of entrenched corporate interests to protect truly wasteful spending, and the (false) portrayal of Social Security and Medicare as runaway entitlements whose reform requires shifting more risk and costs onto Americans. But the underlying cause of these defeats will be the same: a political system that’s highly responsive to the demands of organized economic interests and those at the top of the economic ladder at the expense of the priorities of the middle class. </p>
<p>A recent poll of the super-wealthy shows that compared with ordinary voters, the rich place a much higher priority on deficit reduction than on combating high unemployment. Their support for Social Security and Medicare is weaker than their compatriots’, and they are opposed to the very tax changes most Americans support. Recent political-science studies also suggest little or no responsiveness of political leaders to the opinions of the middle class when they conflict with the opinions of those at the top. </p>
<p> Understanding why this responsiveness is so weak is essential to figuring out a positive agenda for progressive reform. While the story has many parts, we would emphasize three: first, the stark and growing organizational imbalance between progressive forces and ordinary voters on the one hand and corporations and the affluent on the other; second, the hugely asymmetric polarization that has flowed from and reinforced this imbalance, as Republicans have raced to the right on economic issues; and third, the increased incapacity of American government to act effectively on pressing challenges, in part a reflection of the gridlock and immobilization that polarization has wrought.</p>
<p>These three problems are deeply interwoven—and, in turn, reflect the increased mismatch between America’s political structure as it’s evolved over the last generation and the challenges of a complex, interdependent economy. The great achievement of the Founders was to craft a political structure that both required and facilitated compromise. Today, compromise is still required—witness the abysmal legislative output of the last Congress, during which the Republican leadership demonized compromise of any sort—but American political institutions and practices hardly facilitate it. The Republican belief that compromise is treachery is backed up by the right’s aggressive monitoring of politicians and its primary challenges in response to any deviation from party orthodoxy.</p>
<p>Powell’s prescriptions were as gauzy as his diagnosis was concrete. (The closing paragraph in his memo began: “It hardly need be said that the views expressed above are tentative and suggestive.”) His main emphasis was on organization—the need for business to create a standing political operation in Washington whose power could be “assiduously cultivated” and “used aggressively and with determination.” Organization is surely needed by progressives today as well. </p>
<p>But Powell’s main achievement was to pinpoint the problem. If the strategic and organizational weakness of progressives is ultimately rooted in the breakdown of incentives for compromise around middle-class priorities, progressives have two broad directions in which they can move. They can fight for a more parliamentary politics, emulating the right’s capacity to take and sustain a tough stance while reducing the extent to which our institutions require compromise. This would mean taking a cue from the right to build issue-auditing organizations that increase pressure on Democrats to embrace progressive stands, while pushing back against the supermajority hurdle of the filibuster. Or progressives can argue that they inevitably lose from polarization because of its inherent asymmetry and because a durable progressive politics requires broader consensus. This posture seeks to reduce polarization through measures to empower centrists, such as open primaries and court-overseen redistricting, or through technocratic strategies to remove control from elected officials and place it in the hands of independent experts. Reducing the pull of the hard right might be worth reducing the pull of committed progressives—and sometimes of voters—as well. </p>
<p>Many progressives lean toward the first approach. But as did Powell, we believe the initial task is to see the situation clearly. Powell chastised business leaders for “a disposition to appease; to regard the opposition as willing to compromise, or as likely to fade away in due time.” We should have no such illusions about the conservative opposition today, which is increasingly aggressive in seeking to overturn all of the checks on corporate power built up over the course of the last century. Above all, we should recognize that the challenges we face, while reinforced by electoral and messaging weaknesses, are deeply structural—rooted in the imbalance between middle-class and corporate political organization, between votes and money, and between action and inaction.</p>
<h4>Read the other pieces in this series:</h4>
<div class="item-list">
<ul><li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/retilting-playing-field">Retilting the Playing Field</a></h3>
<p class="post-author">John Podesta </p>
<p class="post-date">Nov 28, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/build-independent-political-organization-not-quite-party">Build an Independent Political Organization (But Not Quite a Party)</a></h3>
<p class="post-author">David Cantor and Anthony Thigpenn </p>
<p class="post-date">Nov 28, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/who%E2%80%99s-going-pay-it">Who's Going to Pay for It?</a></h3>
<p class="post-author">Simon Greer </p>
<p class="post-date">Nov 28, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/train-young-oganizers">Train Young Organizers</a></h3>
<p class="post-author">Nelini Stamp </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/create-million-public-service-jobs">Create a Million Public-Service Jobs</a></h3>
<p class="post-author">Heather McGhee </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/movement-futurism">Movement Futurism</a></h3>
<p class="post-author">Ai-Jen Poo </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/make-voting-mandatory-and-filibusters-extinct">Make Voting Mandatory and Filibusters Extinct</a></h3>
<p class="post-author">Thomas Mann </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/elect-more-women">Elect More Women</a></h3>
<p class="post-author">JAN SCHAKOWSKY </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/reclaim-courts">Reclaim the Courts</a></h3>
<p class="post-author">TRIP VAN NOPPEN </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/new-pledge-principles">A New Pledge of Principles</a></h3>
<p class="post-author">STEPHEN HEINTZ </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/recruit-next-generation-donors">Recruit the Next Generation of Donors</a></h3>
<p class="post-author">ROBERT MCKAY </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/recruit-next-generation-donors">Recruit the Next Generation of Donors</a></h3>
<p class="post-author">ROBERT MCKAY </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/new-organizations-workers">New Organizations for Workers</a></h3>
<p class="post-author">Karen Nussbaum </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/six-tasks-progressives">Six Tasks for Progressives</a></h3>
<p class="post-author">Celinda Lake </p>
<p class="post-date">Nov 29, 2012</p>
</li>
<li class="views-row views-row-1 views-row-odd views-row-first" style="margin-bottom:20px;">
<h3><a href="https://prospect.org/article/fight-universal-voter-registration">Fight for Universal Voter Registration</a></h3>
<p class="post-author">MICHAEL KIESCHNICK </p>
<p class="post-date">Nov 29, 2012</p>
</li>
</ul></div>
<p> </p>
</div></div></div>Wed, 28 Nov 2012 13:51:24 +0000215977 at http://prospect.orgJacob S. HackerPaul Pierson